Now, the real question is what effect will this Act have on the pricing particularly in the residential sector in various areas like Residential flats in Gurgaon. Well, that cannot be answered by a plane Yes or No. The thing is that this law will affect different inventories differently. As far as the new launches are concerned, the prices are expected to rise while the already built property will be at a pause in its pricing till the supply gets over. For example- The already built flats in Gurgaon might or might not have any addition in its value.
Commenting on the same, Managing Director of Puravankarasays, Ashish R Puravankara said that the new launches of property say, flats in Gurgaon or any other residential area will initially increase but will ultimately shrink resulting in an extremely different scenario compared to the current demand-supply equation, affecting the immediate property pricing all through the industry.
The under-construction land in the real estate industry account for majority supply. These include unsold properties also. The construction will be over only after one year. These unfinished sites now need to be registered under RERA and stick to its rules and regulations.
One of the many rules of RERA includes selling of the property on the basis of 'super area' and not on 'super built up area (as the case was previously). RERA initiates the selling of the land on the basis of carpet area (it excludes areas of walls or ducts etc) and is 30-15% less in amount as compared to the 'super build up area'. This will result in 40% -50% rise of per square feet cost of the land. But this increment will hardly affect the overall pricing of the land resulting in affordable housing in Gurgaon or Delhi or Mumbai, you name it.
The new rules of RERA have helped bring in transparency, thorough management of rules, and timely delivery of projects. RERA has specifically been introduced from the viewpoint to minimize risk over the buyers. The buyers will have to pay the consequential premium that will help in transfer of risk from buyers to developers and now they will have to bear the default cost (if any).
The builders are already facing problems with raising funds for the under-construction sites, now registering that property under RERA will be an all new burden for them, but all of it is initiated by the government to make sure that the buyer faces absolutely no problems with the bought property.
The Guidelines of RERA also makes it relatively easier for an increase in prices as the demand will increase with respect to the supply. Followings guidelines has to followed which make RERA Impactful and fulfilling:
First, the developers now have to get the uncompleted and new projects registered with the regulatory authorities within three months from the implementation date of RERA. Secondly, they have to deposit 70 per cent of the funds collected from buyers in a separate bank account for construction of the project. This will ensure withdrawal of amount only for construction purposes and completion of projects on time. In case of a delay, now the onus of increased price and the monthly interest to be paid to the banks will fall on the developers not on the consumers as previously was the scenario. The law also prescribes penalties on developers who delay projects. Developers are also required to disclose their project details on the regulator's website, and to provide quarterly updates on construction progress. Thirdly, the act states that any defects of structure or workmanship within five years from possession date will be taken care by the promoter without any extra charges. In case the promoter fails to do so, the aggrieved consumer is entitled to compensation from the promoter.
To make the act appalling, an imprisonment of up to three years for the developer and up to one year for agents and buyers is directed in case of violations of the orders.
As per the data, almost ten lakh buyers every year invest their money in the real estate industry with the dream of owning a house and implementation of this act is a paradigm change to stabilize and to push substantial growth of the real estate industry.